Adams v. Wallace

• Decision Date: 27 November 1923
• Docket Number: 12304.
• Citation: 220 P. 872,94 Okla. 73,1923 OK 1016
• Parties: ADAMS v. WALLACE ET AL.
• Court: Oklahoma Supreme Court

220 P. 872

94 Okla. 73, 1923 OK 1016

ADAMS v. WALLACE ET AL.

No. 12304.

Supreme Court of Oklahoma

November 27, 1923

Syllabus by the Court.

In an action to set aside an alleged fraudulent conveyance of real property, a petition which states in general terms the existence of a demand for $25,000, owing by defendant to plaintiff, will be sustained against a general demurrer and motion to dismiss, although the petition fails to state the exact character and nature of the demand alleged to be owing.

The statutes against fraudulent conveyances should be liberally construed so as to include within their protection all persons who have interests and demands of which they may be defrauded.

Commissioners' Opinion, Division No. 5.

Appeal from District Court, Logan County; Arthur R. Swank, Judge.

Action by H. M. Adams against John N. Wallace and another. Judgment for defendants, and plaintiff appeals. Reversed.

Geo. W Partridge and E. S. Lowther, both of Guthrie, for plaintiff in error.

C. G Hornor and F. H. McGuire, both of Guthrie, for defendants in error.

FOSTER C.

H. M Adams, plaintiff in error, plaintiff below, sued John N Wallace and Sarah F. Wallace, defendants in error, defendants below, in the district court of Logan county, Okl., to set aside an alleged fraudulent conveyance. The parties will be referred to as they appeared in the court below.

From a judgment of the trial court sustaining defendants' demurrer and motion to dismiss his petition, the plaintiff appeals and assigns as error the action of the trial court in sustaining the demurrer and dismissing his action. Plaintiff's petition is as follows:

"Comes now said plaintiff and for his cause of action against the defendants alleges and states:

That heretofore the plaintiff herein instituted a suit in the above-named court, case No. 3199, against the above-named defendant, John N. Wallace, to recover the sum of $25,000 upon the grounds set forth in such suit, which is still pending in said court.

That prior to the institution of said suit, the defendant, John N. Wallace, was the owner of the northeast quarter of section 18, in township 16 north, range 1 west, in Logan county, state of Oklahoma; that within three days after the discovery by plaintiff of the matters charged in said suit, said defendant, John N. Wallace, conveyed said premises to his sister, Sarah F. Wallace, his codefendant herein, with whom he then and still makes his home; that said conveyance was placed of record on the date of its execution, and that one and a half hours prior to such record there was placed on record a certain mortgage on said premises executed by the defendant, John N. Wallace, to the Logan County Bank on the 7th day of January, 1919, and not recorded till the 13th day of March, 1919; that said conveyance was subject to said mortgage and to other mortgages, all of which the grantee in said conveyance assumed and agreed to pay; but plaintiff states that the above-described mortgage was paid by the defendant, John N. Wallace; and, further, that the defendant, John N. Wallace, in pursuance of said conveyance never surrendered possession, or the use or control of said premises to his said sister, but retained the same, and falsely pretended to act therein as her agent.

And plaintiff states that said conveyance by the defendant, John N. Wallace, to his said sister, was made without a fair and valuable consideration; that it was made in bad faith; that it was made for the purpose of hindering, delaying, or defrauding this plaintiff, his creditor, from the collection of his claim made in said cause No. 3199 against the said Wallace; and that said Wallace was, at the date of the execution of said conveyance, indebted to or under a legal liability to this plaintiff by reason of the matters and facts set forth in said cause.

That the said sister of the said John N. Wallace was wholly and financially unable to purchase said premises for a fair consideration; that she was at the time of said conveyance fully cognizant of all the matters set forth in said cause No. 3199, and of the evil purposes and bad faith of the defendant, John N. Wallace, in making said conveyance of said premises to her, and conspired and connived with her brother, the said John N. Wallace, in such purposes and bad intentions.

Plaintiff further states that both defendants, by reason of the matters set forth herein and in said cause No. 3199, are now planning and scheming to sell and dispose of said premises to third parties, in bad faith, and for the purpose of further hindering, delaying, and defrauding this plaintiff out of his claims and demands set forth in said cause No. 3199, and in pursuance of their declarations heretofore made that they would so do.

Plaintiff further states that the defendant, John N. Wallace, has no other property out of which plaintiff's said claim could be realized or satisfied in whole or in part, and that he is practically insolvent, is quitting business and disposing of his personal property and attempting to place the proceeds beyond the reach of the courts by the processes of the law, by covering up and concealing the same.

Wherefore, plaintiff prays that to the extent of any rights, claims, or demands he may have by reason of the matters set forth in said cause No. 3199, the deed of conveyance aforesaid, made by the defendant, John N. Wallace, to his said sister, Sarah F. Wallace, be declared null and void, as provided by the laws of this state, and be wholly set aside as to both defendants herein, and as to any and all persons claiming by, through, or under them, or either of them, and that the premises in such conveyance described be subjected to the satisfaction of such judgment as may be rendered in favor of this plaintiff in said cause No. 3199; and that plaintiff recover costs and have all proper relief herein.

C. C. Smith, Attorney for Plaintiff.

Indorsements: No. 3344; H. M. Adams v. John N. Wallace and Sarah F. Wallace; petition; filed Oct. 22, 1920. Martha M. Neal, Court Clerk."

Defendants challenge the sufficiency of the petition to state a cause of action in that it fails to show the existence of the relation of creditor and debtor between plaintiff and defendants within the meaning of sections 6016, 6017, and 6020, Compiled Oklahoma Statutes 1921, and for the further reason that the petition shows on its face that plaintiff is not a judgment creditor of the defendants, and therefore not entitled to maintain a creditor's bill to set aside a fraudulent conveyance of real property.

The sections of the statute referred to above are as follows:

"Ses. 6016. Debtor Defined.--A debtor, within the meaning of this chapter, is one who, by reason of an existing obligation, is or may become, liable to pay money to another, whether such liability is certain or contingent.

Sec. 6017. Creditor Defined.--A creditor, within the meaning of this chapter, is one in whose favor an obligation exists, by reason of which he is, or may become, entitled to the payment of money. * * *

Sec. 6020.

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